Court Finds That Employee Has a Claim for Wrongful Termination, Based Upon Reduction in Force

Gregory S. Schaer, a Monmouth County based New Jersey Employment Attorney located in Manalapan, represented the employee in a lawsuit against their employer alleging claims of age discrimination.

In Kapossy v. McGraw-Hill, Inc. , 921 F.Supp. 234 (D.N.J. 1996), a former employee alleged that he was subjected to age discrimination and was wrongfully terminated from his employment at McGraw-Hill, Inc. In that case, the employee was employed by McGraw-Hill for twenty-two (22) years as a General Manger of Application Systems Development responsible for supervising a staff of five (5) computer programmers and analysts.

Following a Company reorganization, the employee was interviewed for a new position of Senior Project Director. The employee was subsequently informed that a younger individual was selected for the position and that the employee’s position would be eliminated. The employee was informed that he would be terminated unless he found another position within the Company prior to his termination date.

The employee subsequently interviewed for another position as Project Information Manager and Specialist but was not selected for that position either. Instead, the Company hired somebody from outside to fill the position without offering the employee additional training to prepare him for the position.

The employer claimed that the employee was an at will employee and that the elimination of his position was the result of a necessary and legitimate reduction in force. The employee claimed that the reduction in force was a pretext for age discrimination and that his duties were not assumed by the individual that was hired for the position but rather were taken over by another McGraw-Hill employee who was younger whom the employee had previously supervised.

The employee also alleged that the Company failed to provide him with the necessary training to qualify him for another position, training that was promised in the employee handbooks and procedure manuals. During his employment, the employee was given several different versions of the Company Handbook and, at some time during the employee’s employment, the Company added a disclaimer to the Handbook stating that the Handbook was not meant to impose any legal obligations.

The employee also received a Policy and Procedure Manual that was given to all managerial employees. The employee contended that the Manual and Handbooks were construed by him to create an enforceable employment contract and that the subsequent disclaimers to the Handbook and Manual were ineffective to alter the terms of the contract.

With respect to the employee’s claim for age discrimination, the court noted that the New Jersey Law Against Discrimination, like the Federal Age Discrimination in Employment Act, prohibits employers from basing hiring or other employment decisions on an individual’s age.

The court held that there are two categories which occur in the employment discrimination context. The first type called the “mixed motive” case involves “a situation in which plaintiff offers direct evidence of unlawful discrimination and the evidence as a whole permits a conclusion that both permissible and impermissible considerations played a role in the employer’s decision.”

The court held that the second category of employment discrimination case so called “pretext” case, allows the employee to prove, by direct or circumstantial evidence, that the adverse employment action was a result of discrimination.

In pretext cases, the initial burden of production is on the employee to establish a prima facie case of discrimination. Once the employee has established a prima facie case, the burden of production then shifts to the defendant to articulate a legitimate, non-discriminatory reason for its actions. Ultimately, the employee must show that the employer proffered reasons for its actions are not worthy of believe and that the defendant acted with the intent to discriminate.

With respect to the employee’s claim relating to the elimination of his position, the court held that there was evidence of inconsistencies and unresolved factual disputes which precluded the entry of summary judgment of the employee’s claim alleging that the reduction in force was a pretext for age discrimination.

With respect to the claim for breach of contract, the court held that in New Jersey, an implied promise of job security contained in an employee handbook can give rise to an enforceable contract. The court noted that absent a clear and prominent disclaimer, an implied promise contained in a widely distributed employment manual that an employee would only be fired for just cause was enforceable, despite the fact that the employees otherwise were terminable at will.

The court held that the disclaimer contained within the Company’s Handbook and Manual were insufficient to negate any implied employment contract. The court held that the disclaimer was insufficient because it appeared in substantially the same size text as the other text within the Handbook.

In addition, the court found that the section of the Handbook pertaining to termination also appeared in regular typeface which did not distinguish it from the rest of the typeface in the manual. Based upon this, the court found that the disclaimer was not “conspicuous” enough to notify the employees that their rights were being affected.

The court rejected the employer’s assertion that an employee cannot have the basis for a claim for breach of contract when the employee was terminated as the result of the elimination of their job itself due to legitimate economic or business reasons. The court held that although breach of contract claims generally are based upon claims related to disciplinary procedures, there is no reason why a claim could not arise from the Company’s arbitrary denial of other terms of employment, such as promised training, when that denial leads directly to the employee’s dismissal, at least as long as those terms of employment are reasonably comprehensive.

The court held that the employee, based upon the Manual, had raised legitimate claims as to whether he reasonably expected to receive training prior to his dismissal.

To speak with an experienced New Jersey Employment Law Attorney, contact the Law Offices of Gregory S. Schaer, LLC, conveniently located in Monmouth County, New Jersey.